How health-reform stakeholders will be affected by recent changes

March 21, 2011

The American health care system is an interlocked network of patients, physicians, hospitals, insurers, employers, regulators and other stakeholders. A significant change impacting one component will reshape the entire system. The conflated nature of modern health care is what made 2010’s dramatic reform effort difficult for Congress to navigate and for  many people to understand. This confusion also made it easy for reform critics to exploit consumers’ fears.

The strategic communication challenges will be daunting. Health care reform isn’t a single change but a series of 92 different provisions to be phased in during the next seven years, gradually transforming the complex system that drives 17 percent of the U.S. economy.

Signed one year ago by President Barack Obama, the phased implementation of the law is under way. Twenty-five provisions were implemented last year; 21 more will go into effect this year, including new taxes on pharmaceutical companies and lower prescription drug costs for seniors. The most dramatic changes — like the individual mandate — are slated for 2014.

While political opponents pursue a series of obstructions in Congress, the U.S. Supreme Court is expected to decide the critical legal challenge to health care reform in 2013.

“The debate over defunding and repeal is going to be much more of a political story in 2011 than something that actually means something for consumers immediately,” Larry Levitt, vice president at the nonprofit Kaiser Family Foundation (KFF), told The Wall Street Journal on Dec. 31.

Analysts, scholars and pundits will sort out the political and legal wrangling, but the economic and operational wheels of reform have begun reshaping the market. It is hard to imagine turning back the clock two years from now, even if the Supreme Court deems the individual mandate unconstitutional.

To understand the strategic context of this reform, it’s critical to examine the individual variables affecting the major stakeholders in health care delivery.

Consumers view health care through an intensely personal lens: Will the treatment I need be covered? How can I access care? Can I trust the quality? Can I afford it?

Struggling through the worst economic downturn in eight decades and grappling with higher health insurance premiums and out-of-pocket costs, the public cut its medical spending and ended 2010 evenly divided about reform — four in 10 viewed it favorably; four in 10 viewed it unfavorably, according to a December Kaiser Health Tracking Poll.

The Commonwealth Fund reported in a survey released on Dec. 14 that 75 percent of the nation’s 57 million baby boomers (those 50 to 64) were putting off needed care, and that almost half were postponing preventative care.

Some of the law’s most accessible provisions are taking effect first. These include eliminating insurance restrictions on individuals with pre-existing conditions and allowing children to be covered under their parents’ plan until they turn 26. The most noticeable consumer impact will likely be felt in the South and Southwest, where the number of uninsured adults is the highest.

Patients’ perceptions of the changes will largely depend on how they impact their care, their doctor and their paycheck. Deciphering and demystifying the changes for consumers will be an ongoing communications challenge.

According to a November survey of 2,400 doctors by the nonprofit Physician Foundation, private-practice physicians believe that policymakers ignored them during the reform debate. The findings suggest a potential disconnect between the American Medical Association, which supported the law, and its grassroots stakeholders.

Physicians feel cheated by the rate and scope of change. Only 26 percent told the foundation that they would continue practicing the way they currently are over the next three years. Almost three-quarters reported that they would retire, work part time, stop accepting new patients or look for hospital-based clinical or administrative jobs.

The factors that concern physicians include the growing movement toward Accountable Care Organizations and the “medical home” model of care; a serious shortage of primary care physicians; and reduced consumer spending on office visits, diagnostics and drugs.

The evidence suggests that instead of acting as trusted advocates and guides for consumers who are anxious about reform, disenfranchised physicians are burning out while trying to juggle the demands of patient care.

For the past year or two, most employers have kept wages stagnant while passing along sizable premium increases to workers. Now, with a recovery under way, employers are retooling health and benefits packages that are critical assets for employee retention, recruitment and loyalty.

Leading insurers reported that the reform law’s tax credit for small businesses was enticing companies with fewer than 25 employees to offer workers insurance benefits. “We certainly did not expect to see this in this economy,” Gary Claxton, who oversees an annual survey of employer health plans for KFF, told the Los Angeles Times on Dec. 27.

Employers are turning to consultants to understand the law, comply with new reporting requirements and communicate changes to employees.

“There’s an administrative burden just to try and understand the 2,400 pages of the document,” Jenn Mann, vice president of human resources at software maker SAS Institute Inc., told The Wall Street Journal on Dec. 13.

By the end of 2010, the number of American adults insured through their employers reached its lowest point in three years, according to a Gallup tracking poll. Still, with nearly 45 percent insured through work, employers will continue to serve as critical translators of reform in the years ahead.

Health insurance companies are in an ironic position in the reform milieu. Their reputations will continue to suffer under withering attacks from politicians and consumer health advocates, but they also stand to reap significant financial gains as implementation of the law generates new members and market opportunities.

On Dec. 27, the Los Angeles Times reported that in the six months after the law was signed, UnitedHealth Group Inc., the nation’s largest insurer, added 75,000 new customers from companies with fewer than 50 employees. Coventry Health Care Inc., a Maryland small business insurer, had enrolled 115,000 new workers in the first nine months of 2010.

Major insurers told The Wall Street Journal on Dec. 29 of plans to capitalize on the nearly $40 billion worth of potential work managing Medicaid plans for individual state governments, which will oversee an expansion of the program beginning in 2014. An estimated 16 million new enrollees will join Medicaid that year.

The way that insurers implement facets of the law for employers represents an opportunity to strengthen their brand and build customer loyalty. But it remains to be seen how the industry can rebuild its reputation with state and federal governments gearing up to implement facets of the law that empower regulators to scrutinize premium requests, impose rate hike caps and enforce tough new transparency disclosures.

Stakeholder education and audience reassurance remain priorities for community-based nonprofit hospitals struggling to cope with the operational consequences of the reform law in a tough economy.

The law’s implementation caused an automatic reduction in federal reimbursements to hospitals. At the same time, revenues declined on reduced patient volume, patient debts piled up and costs rose due to increased use of emergency care.

Mass layoffs have cost more than 23,000 hospital employees their jobs during the past two years as providers sought to reduce costs and increase efficiencies.

Communicating the business of health care will become a priority in the years ahead. Experts forecast more hospital mergers, partnerships and expansions. Providers will also try to win their share of the 30 million new paying patients expected to enter the health care system in the next five years.

And on Dec. 19, The Chicago Tribune reported that health providers nationwide “are spending hundreds of millions of dollars on buildings, marketing and new partnerships to position themselves” to attract the future new customers created by the reform law.

In Massachusetts, the second-largest chain of nonprofit hospitals has been converted into a for-profit network financed by Cerberus Capital Management, the New York private-equity firm famous for gambles on distressed investments. Community Health Systems bid a staggering $3.3 billion to acquire Tenet Healthcare, the first of many likely deals that will carry a host of internal and external communications challenges.

Moody’s Investors Service Vice President and Senior Analyst Brad Spielman told The Bond Buyer  last May 5: “There are many factors that are contributing to making an environment that is conducive to mergers, and one of those factors is health care reform.” 

Ed Cafasso
A member of PRSA's Corporate Communications Section, Ed Cafasso is a managing director in the corporate and financial practice for Burson-Marsteller and the agency's Boston market leader.


michelle davis says:

Insightful article. As a PR practioner in Massachusetts, home to the country's first foray into health care reform, I can tell you that marketplace dynamics move quickly once the issue of access is addressed. Now, the market is solely focused on reducing the cost of care. Prepare for a bumby ride and the need to transform the way we deliver care.

March 27, 2011

Michael Shury says:

This article has provided me with valuable information, in the context of Health care reform. I just wish the politicians can sit together and revise the part of the Affordable Care Act that is not functioning well, and improve on it, instead of trying to look for the bad in the healthcare reform, just to score political points, in other words, they should just grow up.

April 28, 2016

Sonji M Kirk says:

This article will be a part of my bibliography and my final paper for school. It was very understandable to read, and to follow.The terms of how this new health reform will affect all those who are involved had in depth information that will be remembered for a while to come. I need to retain this information not only for school but for my health care career.

July 28, 2016

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